U.S. stocks close lower, extend selloff

The S&P 500 and the Dow logged their fourth straight daily losses, during which the bellwether S&P 500 has dropped 3.4%

U.S. stocks closed sharply lower on Tuesday, extending a selloff prompted in part by the run-up to Nvidia earnings, which could test the artificial intelligence boom amid mounting valuation concerns.

All three major U.S. stock indexes ended deep in negative territory, with crude, bitcoin and gold advancing and U.S. Treasury yields dropping as investor risk appetite soured. The S&P 500 and the Dow logged their fourth straight daily losses, during which the bellwether S&P 500 has dropped 3.4%.

Chipmaker Nvidia’s quarterly results, expected on Wednesday, will be scrutinized for signs that the AI company, which has provided the boost for much of the stock market’s recent rally, has staying power or whether the fervour surrounding the technology has created a bubble.

In other earnings, home improvement retailer Home Depot forecast a steeper than expected drop in annual profit, raising concerns about the housing market and the health of the American consumer.

Investors are sensing that the tenor of the market has shifted, said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. They don’t necessarily want to be too bullish on tech in case Nvidia doesn’t hit the ball out of the park.

We’re getting toward the end of a pretty good year, especially if you were a tech investor, and now you’re starting to see a bit of a pullback, Carlson added. Investors want to make sure that they protect their gains.

Official economic indicators that were unavailable during the longest government shutdown in U.S. history are being released, with the Commerce Department’s August report of new orders for U.S. factory-made goods adding 1.4% as expected.